Rising development costs might force console makers Microsoft and Sony to publish more video

RELATED ARTICLES Sony to end feature phones by September Sony shares at near 32 year lows on strategy doubts Sony sees return to profit after record annual loss

games themselves, as independent studios avoid exclusive deals for blockbusters. The fortunes of hardware makers have turned on whether they can attract exclusive hit video games, driving fans to buy their consoles.

But increasingly, the companies will have to fund their own games if they want publishing rights to a game their rivals cannot get.

Konami’s release of Metal Gear Solid 4, a game franchise exclusive to Sony’s PS3, helped narrow the gap between Nintendo’s Wii console and the PS3. The units of PS3 consoles sold hit a record for a non- holiday month, according to NPD research group. But Wedbush Morgan video game analyst Michael Pachter forecasts that independent studio exclusives such as the Metal Gear Solid series will disappear from store shelves as soon as next year.

“The cost of making a game is so high that you need to recover it by selling a lot more units,” said Pachter. “You can’t give up half the market by selling exclusives.” A software maker has to foot a bill of $20 million to $50 million to make a game. Sony has traditionally beaten Microsoft at securing popular game franchises for the PlayStation console. Take Two Interactive Software’s Grand Theft Auto series and Eidos Interactive’s Lara Croft: Tomb Raider games originally were tied to the PlayStation.

But Grand Theft Auto IV was launched simultaneously on the PS3 and Xbox in April. Microsoft dealt another blow when the company announced during July’s E3 video game industry conference that the upcoming Final Fantasy XII game by Square Enix will be released for the first time on the Xbox.

The Final Fantasy franchise had been a PlayStation-only exclusive since 1997. “It’s a trend we’re excited about, but not completely surprised about if you look at the installed base and attached rate,” said Microsoft spokesman David Dennis. “Third party (publishers) are looking at the same things we are and they want to put games into as many people’s hands as possible.”

Exclusive games are not only pricier for independent studios to make than in the past, but analysts say it’s hard for them to commit to one console since the Xbox 360 now rivals the PS3 for sales, unlike in previous generations. With exclusive games fading, console makers will have to depend on games developed within their own studios instead.

“The reality of exclusives is that they will become far more infrequent. The way hardware companies have to offset that is through enhancing the quality of games coming through their own studios that will drive customers to buy their own hardware system,” said Williams.